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George Iype in Bangalore | January 19, 2005

These days, India's information technology capital Bangalore suffers from a creaking infrastructure and a sense of frustration amongst its denizens. But the city still continues to be the hottest for IT companies.


"That is our secret. We manage to find a balance between the woes of the city and its great, charming appeal," jokes K Narasimham, an IT consultant helping various multinational and domestic companies set up shop in the city.

Narasimham gets at least five applications every week from various companies: enquiries about the right office space, human resources requirements, and infrastructure details of Bangalore.

Like Narasimham, scores of IT consultants clutching meticulous data detailing how a new company can be set up in India's Silicon Valley are frantically trying to fight the 'bad image' that the city has of late been receiving in infrastructure sectors.

The 'bad image' began when software giant Wipro [Get Quote] Chairman Azim Premji threatened in July last year to shift his operations out of Bangalore if infrastructure facilities were not improved.

Premji then said deteriorating infrastructure, poor sanitation, frequent power failure and increasing pollution were making it impossible to run smooth operations out of Bangalore. "The infrastructure problem is serious here. To sustain and grow, we need to go to places where there are opportunities -- both manpower and infrastructure," he had said.

Since then, Wipro which employs 11,000 techies in its Bangalore centre, embarked on massive expansion outside Bangalore to cities like Kolkata, Hyderabad, Chennai, Pune and Kochi. It 'co-located', as it likes to term the expansion, to other cities.

A rapid explosion of growth in the past decade has stifled Bangalore. In the early 1990s, there were only a couple of dozen IT firms in Bangalore. Today, there are 1,124 Indian and multinational IT companies operating out of the city.

But over the years, the growth explosion that Bangalore witnessed did not lead to the city's planned development. Thus India's Silicon Valley is caught in a web of serous problems such as these:

  • While scores of IT firms set up shops in Bangalore and its suburbs, roads have almost remained the same. The IT hub of Bangalore can take a load of only 300,000 vehicles; but now there are five times the number of vehicles running around. Congestion is the name of the game on the city streets. Bad road conditions led to the death of some 900 people in accidents last year on Bangalore streets.
  • Power shortage is acute in the city. Azim Premji got a rude shock recently when electricity went off as he was giving an important presentation to multinational client at the Wipro office. Karnataka has a power shortage of 1,500 MW, making many IT companies in Bangalore to depend on power back up systems to run the show.
  • Bangalore airport, where hundreds of techies, managers and venture capitalists board and disembark daily on international routes, is one of the worst airports in the country. A new airport plan is being readied these days, but it would take a good five years for that to materialise.
  • A decade back, Bangalore was known as the Garden City of India with pleasant climate. Today, the air quality index monitored at various spots in the city makes Bangalore to be 'a severely polluted' place.

A K Krishnadas, who runs Pioneer Consulting in Bangalore, says the concerns that Bangalore is no longer the city it used to be are genuine.

"But despite these problems, Bangalore continues to have a great work culture. The city is ahead of the other cities in attracting multinational IT firms because of its first mover advantage," he points out.

Thus, consultants like Krishnadas has been advising clients that Bangalore still remains the most favoured destination for IT companies.

Krishnadas says when a city grows rapidly, it is natural that teething problems should crop up. "But running away from the city is not the answer. Bangalore is trying to cope with the new situation and trying its best to improve the infrastructure," he says.

Figures available with Karnataka government's IT Department prove that despite its problems, Bangalore continues to be the top destination for IT companies.

  • Bangalore continues to attract 2.5 IT firms every week.
  • In April, May and June of 2004 alone, 50 IT companies, including 30 foreign firms with 100 per cent equity, set up shop in the city. The companies were in chip design, enterprise application development and IT-enabled services, including business process outsourcing segments.
  • There are 40 SEI CMM Level 5 companies in the world; 18 of them are in Bangalore.
  • During fiscal 2003-04, Bangalore witnessed phenomenal growth, with the industry growing by 46 per cent in software exports against a national average of 30.5 per cent over the previous fiscal.
  • Of the total exports from Karnataka, Bangalore takes the cake with 1,124 Indian and multinational firms earning Rs 17,900 crore (Rs 179┬ábillion) from software services and products last year.

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